Premium Essay

Just for Feet

In: Business and Management

Submitted By ruiyi
Words 666
Pages 3
Acct 6355 Ruiyi Feng Auditing Standard No. 11 |
Consideration of Materiality in Planning and Performing an AuditThe fact is material if there is "a substantial likelihood that the …fact would have been viewed by the reasonable investor as having significantly altered the 'total mix' of information made available."To obtain reasonable assurance about whether the financial statements are free of material misstatement, the auditor should plan and perform audit procedures to detect misstatements.To plan the nature, timing, and extent of audit procedures, the auditor should establish a materiality level for the financial statements as a whole and materiality levels for particular accounts or disclosures.The auditor should determine the amount of tolerable misstatement for purposes of assessing risks of material misstatement and planning and performing audit procedures at the account or disclosure level.For multiple locations or business units, the auditor should determine tolerable misstatement for the individual locations or business units at an amount that reduces to an appropriately low level the probability that the total of uncorrected and undetected misstatements would result in material misstatement of the consolidated financial statements.The auditor should reevaluate the established materiality level and tolerable misstatement when, because of changes in the particular circumstances or additional information that comes to the auditor's attention.If the auditor's reevaluation results in a lower amount for the materiality level, the auditor should (1) evaluate the effect, if any, of the lower amount on risk assessments and audit procedures and (2) modify the nature, timing, and extent of audit procedures as necessary to obtain sufficient appropriate audit evidence.Auditing Standard No. 14 |
Evaluating Audit Results
Based all relevant audit evidence, the…...

Similar Documents

Premium Essay

Case 1.3 Just for Feet

... Just for FEET, Inc. | Balance Sheet | Years ending Jan 31st | 1996 | 1997 | 1998 | Current Assets: | Cash & Equivalents | 36.93% | 18.40% | 1.80% | Marketable Securities AFS | 9.04% | 0.00% | 0.00% | Accounts Receivable | 1.74% | 3.53% | 2.74% | Inventory | 35.47% | 45.97% | 58.01% | Other Current Assets | 0.56% | 1.50% | 2.65% | Total Current Assets | 83.75% | 69.40% | 65.20% | Property & Equipment, net | 14.61% | 21.08% | 23.29% | Goodwill, net | 0.00% | 8.05% | 10.31% | Other | 1.64% | 1.46% | 1.19% | Total Assets | 100.00% | 100.00% | 100.00% | Current Liabilities: | Short-Term Borrowings | 26.61% | 20.22% | 0.00% | Accounts Payable | 10.35% | 11.41% | 14.55% | Accrued Expenses | 1.46% | 2.07% | 3.60% | Income Taxes Payable | 0.11% | 0.30% | 0.13% | Current Maturities of LT Debt | 0.56% | 0.72% | 0.96% | Total Current Liabilities | 39.09% | 34.73% | 19.25% | LT Debt & Obligations | 2.76% | 5.48% | 33.51% | Total Liabilities | 41.85% | 40.21% | 52.75% | Shareholders' Equity: | Paid-In Capital | 50.69% | 48.76% | 36.20% | Retained Earnings | 7.47% | 11.03% | 11.04% | Total Shareholders' Equity | 58.15% | 59.79% | 47.25% | Total Liabilities & Equity | 100.00% | 100.00% | 100.00% | Case 1.3 Just for FEET, Inc. | Income......

Words: 1008 - Pages: 5

Premium Essay

Just for Feet Case

...Just for Feet 1) High risk financial statement items for Just for feet are the outrageous increase in debt from 1998 to 1999. The disappearance in property and equipment from 1998 to 1999. Also the large decrease in inventory from 1997 to 1998 would need to be looked into. The doubling in accounts payable is also something that would need to be examined 2) Some of internal audit risks are that management was obsessive over earnings and doing anything to meet earnings expectations. Also some other problems are that management aggressively interprets accounting standards. Management also accepts high levels of risk. These all provide an environment in which employees will do what is necessary to meet expectations even if it means fudging the accounting. 3) Some inherent risks in the industry and subindustry is that the retail athletic shoe market would be a lack of customer base to support all of the different competitors. Also in an area like Alabama where the market may be saturated with competition, and there will not be enough excess cash to spent on shoes. Also some other risks are the shoe stores in the malls. Also in order to get ahead of all the competition, a company may have unrealistic growth goals and may be taking on too much debt in order to attempt to grow ahead of competitors. You would want to ensure that the client is actually making the sales and that the receivables they are claiming do actually exist. 4) 1) There operating cash......

Words: 891 - Pages: 4

Free Essay

Just for Feet, Inc.

...Just for Feet, Inc. Abstract Just for Feet, Inc. (JFF), its executive vice president; Don-Allen Ruttenberg, and the company’s auditing firm; Deloitte & Touche, LLP, and its associates; Steven H. Barry, CPA and Karen T. Baker, CPA, were all found guilty, on some level, in the fraud of Just for Feet, Inc. Ruttenberg purposely gave the company’s accounting department false financial information causing the accountants to record over $5 million in fictitious accounts receivable. This, in turn, caused the income statement to be overstated by $5 million (Knapp, M., 2009). The company’s auditors Deloitte, Barry, and Baker included the false information in JFF’s 1998 financial reports. These false reports were prepared for public filing with the Securities and Exchange Commission, which resulted in shareholders of JFF to be defrauded. Ruttenberg, Deloitte, Barry, and Baker were brought to justice, and the company’s shareholders settled for $32.4 million in a class-action lawsuit (Knapp, M., 2009). Just for Feet Based in Birmingham, Alabama, Just for Feet (JFF) was established in 1977 and became a publicly traded company in 1994. Despite a period of slow growth in the retail industry, JFF expanded rapidly from 1994 to 1999. By 1998, the company’s exceptional revenue growth deemed it as the top-selling retailer of athletic shoes and apparel in the United States. In JFF’s 1998 financial statements, the company reported $689.4 million in assets, $774.9......

Words: 1962 - Pages: 8

Premium Essay

Case 1.3 Just for Feet

...Synopsis 1.) Just for Feet | Common Size Balance Sheet | | 1996 | 1997 | 1998 | Current assets: | | | | Cash and cash equivalents | 36.93% | 18.40% | 1.80% | Marketable securities | | | | available for sale | 9.04% | 0.00% | 0.00% | Accounts receivable | 1.74% | 3.53% | 2.74% | Inventory | 35.47% | 45.97% | 58.01% | Other current assets | 0.56% | 1.50% | 2.65% | Total current assets | 83.75% | 69.40% | 65.20% | | | | | Property and equipment, net | 14.61% | 21.08% | 23.29% | Goodwill, net | 0.00% | 8.05% | 10.31% | Other | 1.64% | 1.46% | 1.19% | Total assets | 100.00% | 100.00% | 100.00% | | | | | Current Liabilities: | | | | Short term borrowings | 26.61% | 20.22% | 0.00% | Accounts payable | 10.35% | 11.41% | 14.55% | Accrued expenses | 1.46% | 2.07% | 3.60% | Income taxes payable | 0.11% | 0.30% | 0.13% | Current maturities of | | | | long term debt | 0.56% | 0.72% | 0.96% | Total current liabilities | 39.09% | 34.73% | 19.25% | | | | | Long term debt and obligations | 2.76% | 5.48% | 33.51% | Total liabilities | 41.85% | 40.21% | 52.75% | | | | | Shareholders' equity: | | | | Common stock | 0.00% | 0.00% | 0.00% | Paid-in capital | 50.69% | 48.76% | 36.20% | Retained earnings | 7.47% | 11.03% | 11.04% | Total shareholders' equity | 58.15% | 59.79% | 47.25% | | | | | Total liabilities and | | | | shareholders' equity |......

Words: 1175 - Pages: 5

Premium Essay

Just for Feet

... Systems analysis – the process of understanding and specifying in detail what the information system should do Systems design – the process of specifying in detail how the many component parts of the information system should be physically implemented Systems analyst – a business professional who uses analysis and design techniques to solve business problems using information technology Supers system a larger system that contains other system Functional decomposition – dividing a system into components based on subsystems that in turn are further divided into subsystem System boundary – the separation between a system and its environment that inputs and outputs must cross Automation boundary – the separation between the automated part of a system and the manual part of a system Transaction processing system – information systems that capture and record information about the transactions that affect the organization Management information system – information system that takes information captured by transaction processing systems and produces reports that management needs for planning and control Executive support system – support system that allow a user to explore the impact of available options or decisions Communication support system – supports systems that allow employees to communicate with each other and with customers and suppliers. Office support systems - support that help employees create and share documents including reports proposals, and memos Tools –......

Words: 605 - Pages: 3

Free Essay

Ten Years in Just 89 Square Feet

...Ten Years in Just 89 Square Feet Jay Shafer and the Tiny House Movement by Antony Taylor For ten years, Jay woke up every morning to his bedroom ceiling, just 3' away from his face. After climbing down from his loft bed into his 6' x 6 ½' living room, he would enter his 4' x 2' bathroom. To most people, Jay would appear to be a prisoner, and the conditions might appear inhumane, yet Jay is not a prisoner, nor has he been forced into these living conditions. In fact, Jay not only chose to live in such a small space, he designed it himself! Jay's house for ten years, the “Epu” is the size of a walk-in closet in most of today's homes, yet it contains a living room, desk, fully functioning kitchen, separate bathroom, and loft bed space. Jay Shafer is the owner of the Tiny Tumbleweed House Company, founder of the Small House Society, an ecological activist, a new-era architect, and a lifestyle revolutionary. His minimalist lifestyle design has been featured in The New York Times, The San Francisco Chronicle, The Wall Street Journal, and Time Magazine. He and his tiny house has been featured on “CNN”, “Oprah”, “This Old House” and countless local news stations. Around the country, people are purchasing his designs, attending his workshops, and following his revolutionary example of how to live life with less space and less possessions, resulting in less of a drain on resources and the environment. A Mixture of Motivations Today's economy suffers in part due...

Words: 1653 - Pages: 7

Free Essay

Types of Feet

...Foot problems are one of the most common health complaints. The high incidence of foot problems is understandable given the fact that there are 26 bones, 33 joints, 112 ligaments, and tendons, nerves, and blood vessels in the foot. It’s even more understandable when the weight of the body is considered. The force of the body weight borne by the foot increases roughly 1½ times during walking and up to 3-4 times during running. Add in 10,000 steps during a typical day while wearing ill-fitted shoes possibly, and it’s a wonder one’s feet are willing to get out of bed the next day. Not all feet are created equal. To tell what type of foot one has, one can get the bottom of the feet wet, stand on a paper bag, and check the outline of foot. If a lot of the foot between the heel and forefoot can be seen, then one has a flat foot. If there is minimal contact of the midfoot between heel and forefoot, then one has a high arched foot. An outline in between is considered a neutral foot. 1. Flat Foot (Pronation) * The foot rolls inward and flattens (pronates) with weight bearing, placing increased stress on the inner foot structures. * This is typically a flexible foot, providing decreased stability during walking. * This person tends to wear out the inner side of the shoe, to include under the big toe. Calluses can be seen frequently under the base of the 2nd and 3rd toes and inside of the big toe. * If this person’s shoe is placed on a flat surface, the shoe may tilt......

Words: 1003 - Pages: 5

Premium Essay

Feet in Straps

...Exercise – Feet in straps Inhale to flex hips, bringing feet towards the ceiling. Maintain knees straight and feet relaxed. Exhale and press feet back down towards the footbar, extending the hips. Core Awareness Engage the abdominals before moving the legs. Exhale and pull the abdominals in, then move the legs. Your core is like the corset which is covering the transversus abdominals and oblique abdominals below the chest and above the pelvis and ties back to the thora-columbar fascia. The tie endings of the corset are also tied on the reformer, not allowing any movement of the core and pelvis. Place your fingers on the lower abdominals and as you lower your legs feel these muscles in action. Imagine that the lower abdominals is like a big solid rock that maintain the pelvis stable on the reformer. Disassociation of the hips Draw the hip bones together and stabilize the back before pulling the straps with your feet. Do not move the upper body as you raise your legs. Imagine that your back is glued on the reformer and that your hips are separated from the upper body and free to support the legs movement. Imagine your legs to be the safety bar in front of a railway passage, your pelvis to be the solid platform that does not move and the hips to be the joint between the platform and the bar, which supports the bar vertical movement. Raise your leg to raise the safety bar and let the cars pass through. Lower your legs in order to lower the bar and give......

Words: 508 - Pages: 3

Premium Essay

Just for Feet

...T.1.SAS No. 106 “Audit Evidence’, identifies the principal “managementassertions” that underlie a set of financial statements. The occurrenceassertion was particularly critical for ZZZZ Best’s insurance restorationcontracts. ZZZZ Best’s auditors obtained third-party confirmations tosupport the contracts, reviewed available documentation, performedanalytical procedures to evaluate the reasonableness of the revenuesrecorded on the contracts, and visited selected restoration sites.Comment on the limitations of the evidence that these proceduresprovide with regard to the management assertion of occurrence. Upon the performance of those procedures, the auditors of ZZZZBest Inc. had obtained evidence in order to draw reasonableconclusions on which to base the audit opinion. However, theseevidences are subject to limitations due to factors not controlled by theauditors. First limitation of the evidence is its insufficiency to supportthe occurrence, reliability and relevance of events and transactions.Mere paperwork is not enough to prove an event to have existed. Italso needs inquiries from people accountable in recording orrecognizing such events. Moreover, there’s a risk in being dependenton evidences provided by the management itself. Auditors should askcooperation from the third parties in order to verify all records. Secondlimitation is the rules implemented by the client which prohibit auditorsto further inspect or review the financial standing of the company.Some clients...

Words: 1658 - Pages: 7

Premium Essay

Just for Feet, Case Study

...Just for Feet, Case Study 1. Balance Sheets Just for FEET, Inc. | Balance Sheet | Years ending Jan 31st | | | | Current Assets: 1996 1997 1998 | Cash & Equivalents | 36.93% | 18.40% | 1.80% | Marketable Securities AFS | 9.04% | 0.00% | 0.00% | Accounts Receivable | 1.74% | 3.53% | 2.74% | Inventory | 35.47% | 45.97% | 58.01% | Other Current Assets | 0.56% | 1.50% | 2.65% | Total Current Assets | 83.75% | 69.40% | 65.20% | Property & Equipment, net | 14.61% | 21.08% | 23.29% | Goodwill, net | 0.00% | 8.05% | 10.31% | Other | 1.64% | 1.46% | 1.19% | Total Assets | 100.00% | 100.00% | 100.00% | Current Liabilities: | Short-Term Borrowings | 26.61% | 20.22% | 0.00% | Accounts Payable | 10.35% | 11.41% | 14.55% | Accrued Expenses | 1.46% | 2.07% | 3.60% | Income Taxes Payable | 0.11% | 0.30% | 0.13% | Current Maturities of LT Debt | 0.56% | 0.72% | 0.96% | Total Current Liabilities | 39.09% | 34.73% | 19.25% | LT Debt & Obligations | 2.76% | 5.48% | 33.51% | Total Liabilities | 41.85% | 40.21% | 52.75% | Shareholders' Equity: | Common Stock | 0.00% | 0.00% | 0.00% | Paid-In Capital | 50.69% | 48.76% | 36.20% | Retained Earnings | 7.47% | 11.03% | 11.04% | Total Shareholders' Equity | 58.15% | 59.79% | 47.25% | Total Liabilities & SH' Equity | 100.00% |...

Words: 557 - Pages: 3

Premium Essay

Just for Feet Case Study Review

...Tiffany Hale AC503-02 Unit 3 Project 1. JUST FOR FEET, Inc. Income Statement Years ended January 31st | |1996 |1997 |1998 | |Net sales |100% |100% |100% | |Cost of sales |57.54% |58.46% |58.38% | |Gross Profit |46.24% |41.54% |41.62% | |Other revenues |0.23% |0.23% |0.17% | |Operating expenses: | | | | | Store operations |27.04% |29.18% |30.01% | | Store opening costs |4.38% |1.41% |1.76% | | Amortization of Intangibles |0.07% |0.25% |0.27% | | General & Administrative Expenses |3.07% |3.77% |3.14% | | Total Operating Expenses |34.57% |34.60% |35.18% | |Operating income ...

Words: 574 - Pages: 3

Premium Essay

Just for Feet

...Assignment 4: Just for Feet Harold Ruttenberg, a native of South Africa, paid for his college education by working as a sales clerk in a men`s clothing store. Following his graduation, Harold Ruttenberg began importing Levi`s jeans from the United States and selling them from his car. Ruttenberg earned enough capital from selling the Levi`s jeans to open his own retail store. By the time Harold Ruttenberg reached the age of 30, he owned a small chain of men`s apparel stores. Due to mounting political and economic troubles in South Africa during the early to mid-1970s, Ruttenberg decided to move his family to the United States. Ruttenberg arrived in California in 1976 with less than $30,000 due to South Africa`s strict emigration laws, but he was nonetheless determined to become a successful retail business entrepreneur. Ruttenberg and his family eventually settled in Birmingham, Alabama in favor of a more affordable business environment. In 1988, Ruttenberg decided to begin a new business venture in the retail shoe business. At the time Ruttenberg began his new business venture the market for high priced athletic shoes was growing rapidly, and becoming a larger segment of the retail shoe industry. During this time, the principal retail outlets for the major athletic shoe manufacturers were in thousands of suburban malls across the United States. A problem with having a retail store in a suburban mall is the space is relatively small limiting a retailer’s ability to......

Words: 3182 - Pages: 13

Premium Essay

Just for Feet

...Case Study of Just For Feet Inc. Xuan Zhang Q1. Prepare common-sized balance sheets and income statements and compute key ratios for 1997-1998. What were the high-risk financial statement items for the 1998 audit? * Common-sized financial statements: * Key ratio analysis: Liquidity and solvency: | 1999 | 1998 | 1997 | Current ratio | 3.387 | 1.998 | 2.142 | Debt to equity | 1.117 | 0.672 | 0.720 | Times interest earned | 6.376 | 24.665 | 28.286 | Activity |   |   |   | AR turnover | 44.641 | 42.749 | 39.127 | Inventory turnover | 1.493 | 1.649 | 1.107 | Profitability ratios | | |   | Operating margin | 6.61% | 7.17% | 8.12% | Net margin | 3.44% | 4.47% | 5.43% | Return on assets | 3.87% | 4.77% | 3.70% | Return on equity | 8.18% | 7.98% | 6.37% | According to the data computed above, Just For Feet did relatively well in liquidity since the current ratio and debt to equity were similar to companies in the same industry. Besides, JFF had a typical AR turnover rate as others in the retail businesses, and the operating margin and net margin also looked fine. But turn to inventory turnover rate, the number was quite terrible for a retail company. Compare to average number of the industry which is around 2.8-3.2, JFF’s faced a serious difficulty on inventory turnover, which led to a potential risk in generating profit. Also the return on assets and equity were below the competitors in the market, and the time interest earned......

Words: 1362 - Pages: 6

Free Essay

Bound Feet & Western Dress

...According to Chinese culture and tradition, women are seen as nothing. When Chinese girls are born, they are raised to obey their fathers and seen as no use because she will eventually become the property of a husband and his family with the sole purpose of bearing children. They are simply raised to believe that women are much less important than men. Pang-Mei Natasha Chang is the author of the book: Bound Feet & Western Dress, which is a memoir that reflects on the life and struggles of her great-aunt, Chang Yu-i, her family and friends, as well as the family of her first husband, Hsu Chih-mo during the crossroads of traditional Chinese culture and Western ideas. This book includes a chronology of events, prologue, and also an epilogue. Bound Feet & Western Dress was published in New York City, by Anchor Books in October of 1997. Furthermore, from information in this book, I will attempt to write an essay that will explain the changing ideas of the family in modern China, how and why these ideas change, and why Chang Yu-i’s experiences were exceptional. Yu-i was born in the year 1900, a time when Chinese tradition and culture were taken very serious. As men moved forward, women stayed behind in the past with the sole purpose of becoming the property of a husband one day and giving birth to sons to carry on the family name. Before Yu-i told her story to her niece, there were a few things she wanted her to know so she would understand: “In China, a woman is nothing.......

Words: 1644 - Pages: 7

Premium Essay

Just for Feet

...deliberate violation of GAAP and the negative figures for the company cash flow could have been a clear warning and as such was not expected to record profits as it happened. The management through Harold, his wife and son got rid of a large part of their securities worth $49.5 million. However, the CEO still continued to give positive projections about the future prospects of the company. It could have not been possible that a major shareholder like Ruttenberg would have taken such action without having prior knowledge of what’s on goings in the company. This is an issue that could have raised a red flag to the auditing firm. The next event by the management was the sale of junk bond for $200 million which are normally very risky and just after few weeks the company sent profit warnings. The company management went ahead and announced a possibility of defaulting on the first payment of interest to investors. These three events were clear indications of a problem in financial reporting and hence the auditing firm could have been keen to notice them. One of the key items that were high risk in the financial statements of the company is the inventory. The company also had a substantial amount of slow moving goods. The management, especially the accounting department could not apply the market rule or the lower cost in arriving at the end year market valuation. The company therefore ended up with a low value for the provision of inventory obsolescence in 1997 and 1998......

Words: 1164 - Pages: 5